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                                                                    EXHIBIT 10.1
                         SERIES B CONVERTIBLE PREFERRED
                            STOCK AMENDMENT AGREEMENT

         THIS AGREEMENT is made and entered into effect as of June 1, 1999 by
and between Innovative Gaming Corporation of America, a Minnesota corporation
(the "Company") and KA Investments, LDC, a corporation organized under the laws
of the British Virgin Islands (the "Shareholder").

         WHEREAS, the Shareholder beneficially owns all of the issued and
outstanding shares of Series B Convertible Preferred Stock of the Company issued
May 13, 1998 ("Preferred Stock");

         WHEREAS, the parties hereto entered into a Letter Agreement dated May
18, 1999, as amended May 28, 1999, pursuant to which the Shareholder agreed to
amend the Certificate of Designation relating to the Preferred Stock (the
"Preferred Stock Terms") as indicated herein in exchange for a warrant to
acquire 350,000 shares on the terms indicated herein; and

         WHEREAS, the Shareholder and The Shaar Fund, Ltd. (the "Purchaser")
will enter into a Preferred Stock Purchase Agreement (the "Preferred Stock
Purchase Agreement") pursuant to which the Shareholder will sell to the
Purchaser 2,375 shares of Preferred Stock, all of the issued and outstanding
shares of Preferred Stock.

         NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually agreed as follows:

1.       Amendment of Preferred Stock Terms. Concurrently with consummation of
         the sale contemplated by the Preferred Stock Purchase Agreement, the
         holders of Preferred Stock agree to have filed or cause to be filed,
         the Amended Preferred Stock Terms in the form attached hereto as
         Exhibit 1.

2.       Warrant. In consideration for amending the Preferred Stock Terms in the
         form attached hereto as Exhibit 1, the Company shall issue a five year
         warrant to acquire 350,000 shares of the Company's Common Stock at
         $1.50 per share in the form attached hereto as Exhibit 2.

3.       Shareholder Covenants. Shareholder hereby agrees and covenants
         to the Company that it will not, nor will it cause its affiliates to,
         enter into any short sales or other hedging transactions with respect
         to the Company's Common Stock at any time for six months after the
         execution of this Agreement. After such six month period, the
         Shareholder will not, for the subsequent six month period, nor will it
         cause its affiliates for such subsequent six month period to, enter
         into short sales or other hedging transactions with respect to the
         Company's Common Stock in excess of 25,000 shares per month. For
         purposes of this Agreement, the term "affiliate" shall mean the
         Shareholder, or any successor thereto, Deephaven Capital, Inc.,
         ("Deephaven") any entity for which Deephaven serves as general partner
         or otherwise provides investment advisory services, or of Deephaven's
         executive officers or directors.



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         Shareholder owns as of the date hereof 2,375 shares of Preferred Stock,
         constituting 100% of the outstanding Preferred Stock of the Company.

4.       General

         4.1 Parties and Assignment. This Agreement shall be binding upon and
         shall inure to the benefit of the parties and their respective
         successors and assigns, including any subsequent shareholder of the
         Preferred Stock; provided, however, that this Agreement may not be
         assigned by any party without the consent of the other parties.

         4.2 Notices. Any notice that any party hereto is required or may desire
         to give to any other party hereto shall be in writing and shall be
         deemed to have been properly given only if hand delivered, sent by
         personal courier service, telecopied, or mailed by registered,
         certified, or express mail, postage prepaid (mailed notices shall be
         deemed given upon receipt), to the following persons at the following
         addresses (or to such address as may be specified from time to time by
         such party by notice given as provided herein):

         To the Company:       Innovative Gaming Corporation of America.
                               4750 Turbo Circle
                               Reno, Nevada 89502
                               Attention: Chief Financial Officer

         To the Shareholder:   Bank of Butterfield International (Cayman) Ltd.
                               Butterfield House
                               Fort Street, Georgetown
                               Grand Cayman, Cayman Island

         With a Copy to:       KA Investments, LDC
                               c/o Deephaven Capital
                               1712 Hopkins Cross Road
                               Minnetonka, Minnesota 55304
                               Attention: Bruce Lieberman

         4.3 Counterparts. For the convenience of the parties and to facilitate
         the execution of this Agreement, any number of counterparts hereof may
         be executed and each such executed counterpart shall be deemed to be an
         original instrument.

         4.4 Headings. The headings of paragraphs hereunder are for convenience
         and reference only, and shall not be deemed a part of this Agreement.

         4.5 Waiver; Remedies. No delay or failure on the part of any party
         hereto to exercise any right, power, or privilege hereunder shall
         operate as a waiver thereof, nor shall any waiver on the part of any
         party hereto of any right, power, or privilege hereunder operate as a
         waiver

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         of any other right, power, or privilege hereunder, nor shall any single
         or partial exercise of any right, power, or privilege hereunder
         preclude any other or further exercise thereof or the exercise of any
         other right, power, or privilege hereunder.

         4.6 Entire Agreement. This Agreement sets forth the parties' final and
         entire agreement with respect to its subject matter and supersedes any
         and all prior understandings and agreements. This Agreement shall not
         be modified or amended in any fashion except by an instrument in
         writing signed by the parties hereto.

         4.7 No Third Party Beneficiaries. This Agreement is not intended to
         confer upon any person other than the parties hereto any rights or
         remedies hereunder.

         4.8 Severability. If any provision of this Agreement shall be held by
         any court of competent jurisdiction to be illegal, invalid or
         unenforceable, such provision shall be construed and enforced as if it
         had been more narrowly drawn so as not to be illegal, invalid or
         unenforceable, and such illegality, invalidity or unenforceability
         shall have no effect upon and shall not impair the enforceability of
         any other provision of this Agreement.

         4.9 Governing Law. This Agreement shall be construed in accordance with
         the laws of the State of Nevada (without regard to principles of
         conflicts of laws) applicable to contracts made and to be performed
         within such State.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly signed in their respective names all as of the date and year first above
written.


                                  INNOVATIVE GAMING CORPORATION
                                     OF AMERICA


                                  By:  s/ Edward G. Stevenson
                                      ------------------------

                                      Its:  Chairman and CEO
                                          --------------------


                                  KA INVESTMENTS, LDC


                                  By:  Gary Jobczak
                                      ------------------------


                                      Its:  Secretary
                                          ------------------------

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